Despite Housing Crisis, Mamdani in No Hurry to Fix 485x

If your car’s warning lights start flashing, do you take it in for repairs or keep driving until the brakes fail?

Leila Bozorg keeps driving.

Bozorg, Mayor Zohran Mamdani’s deputy mayor for housing, believes the state shouldn’t amend 485x unless the crucial multifamily development law remains broken for a while longer.

Here’s what The City wrote last week:

Bozorg doesn’t think the law needs any changes. “If you look at the history of 421a, there was slow uptake in early years and then it became a robust program that many used,” she said. “So I think it’s too early to say that it has failed.”

Pro-housing folks are optimistic about Bozorg. She just hired Andrew Fine from the YIMBY group Open New York as a senior adviser — one of several signs that she wants a lot more housing built. But her reasoning about the history of 421a needs a reality check.

The numbers simply don’t tell the whole story of 421a, which preceded 485x as an essential tax break for developers to build mixed-income rental buildings in the city.

The last two times 421a expired, the state legislature made the new version less generous. So developers rushed to get their foundations in the ground before the expiration, then spent the next few years finishing the projects.

Of course there was a pause before they embraced the new version.

First, many developers didn’t have the capacity to start a project with the new tax break while they still had holes in the ground under the old one.

Second, projects cannot compete on rents with simultaneous projects getting a more generous tax break. Projects that can’t compete don’t get built.

For the same reasons, 485x was destined to get off to a slow start, as Bozorg noted. Its terms are less generous than 421a’s, and lots of 421a projects are under construction or soon to begin.

But the issues with 485x go beyond that. Its wage scale, which kicks in at 100 units and ramps up at 150, is shrinking projects. That hasn’t happened before. Developers warned about the 99-unit problem as soon as 485x passed in 2024, and they have been proven right.

Project filings show that developers are keeping projects under 100 units to avoid the construction wage floor and the financial risks it presents.

Some are splitting projects into two or three buildings, each with fewer than 100 units, but this is inefficient and raises costs — the opposite of what 485x is supposed to achieve.

Other sites don’t get developed at all because they can’t accommodate two buildings and the economics don’t work for a 99-unit project.

Letting it fail for another two or three years is a bad idea. In a housing crisis rooted in a supply shortage, missing years of full production would be political malpractice. And there is no question that 485x is leaving thousands of units unbuilt.

I don’t mean to pin the blame on Bozorg. She works for Mamdani, who is aligned with construction unions just like his favorite villain Andrew Cuomo was. (As governor, Cuomo shut down 421a for 15 months at the behest of the unions before finally forcing them to make a deal.)

Bozorg believes developers will negotiate project-labor agreements with unions so they can do 485x projects without the high cost and risk of the wage floor. But that creates an obstacle for every 100-plus-unit project. Bozorg’s job is to remove obstacles, not endorse them.

The city and state need to create a viable framework for developers to build as-of-right with as few bottlenecks as possible. Negotiating one PLA at a time is not the way to build our way out of the housing shortage.

Gary LaBarbera is the main reason lawmakers are hesitant to fix 485x. At one time, such projects didn’t matter so much to the construction unions in his umbrella group, because they were busy enough building public infrastructure and Class A office towers. But things have changed.

First, nonunion contractors learned how to build towers. And now infrastructure projects are stalling.

Donald Trump — whom construction union members largely voted for — is halting infrastructure projects to get concessions from blue states or sanctuary cities, or because they are not named after him. He also hates wind turbines.

Meanwhile, not much office is going up.

So the unions want 100-plus-unit projects to themselves and will cling to the 485x wage scale even if it takes housing production down with it. State legislators and Gov. Kathy Hochul (all up for re-election) won’t change the law this year, and Mamdani won’t ask them to.

How many years will they wait?